Katherine Ross

New York Attorney General Letitia James said Genesis and the attorney general’s office will create a “Victims Fund” for creditors of Genesis.&nbsp;



The fund will receive “up to $2 billion” from the remaining assets of Genesis.



“If those creditors are not made whole based on today’s digital asset values, the Victims’ Fund will receive up to $2 billion from Genesis’ remaining assets,” the press release <a href="https://ag.ny.gov/press-release/2024/attorney-general-james-secures-settlement-worth-2-billion-crypto-firm-genesis">said</a>.&nbsp;



The settlement was approved by a bankruptcy judge late Friday after being challenged by parent company Digital Currency Group earlier this year.&nbsp;



Genesis and the NYAG originally <a href="https://blockworks.co/news/genesis-settles-new-york-attorney-general">announced the settlement </a>back in February.&nbsp;



Read more: <a href="https://blockworks.co/news/bankruptcy-court-dcg-out-of-money">Bankruptcy court says DCG is ‘out of the money’</a>



As part of the settlement, Genesis agreed to cease current business offerings in New York and is prohibited from future business in the state.



According to a press release, the settlement is the “largest against a cryptocurrency company in state history.”



“This historic settlement is a major step toward ensuring the victims who invested in Genesis have a semblance of justice. Once again, we see the real-world consequences and detrimental losses that can happen because of a lack of oversight and regulation within the cryptocurrency industry. New York investors deserve the peace of mind that comes from a properly regulated marketplace, and that is something my office will always act to achieve,” James said in a press release.&nbsp;



The NYAG <a href="https://blockworks.co/news/genesis-gemini-nyag-lawsuit">sued DCG, Gemini and Genesis</a> in October of last year, alleging that Gemini and Genesis coordinated on two “fraudulent schemes” with the Gemini Earn product.&nbsp;



DCG allegedly “coordinated” with the two companies, per the lawsuit.&nbsp;



The settlement announcement puts Genesis a step closer to finalizing its bankruptcy proceedings after a judge approved its liquidation plan at the same time as the settlement on Friday.



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NYAG says Genesis settlement to pay back creditors up to $2B

Casey Wagner

New York Attorney General Letitia James is now seeking $3 billion – triple the amount initially suggested – in restitution from Gemini Trust and Digital Currency Group for alleged fraud involving the companies’ Gemini Earn product.&nbsp;



James’ office initially sued Gemini, DCG and related parties, including DCG CEO Barry Silbert and subsidiary Genesis, in October, <a href="https://blockworks.co/news/genesis-gemini-nyag-lawsuit">alleging investors had been swindled out of $1.1 billion</a>. The figure has now increased to $3 billion, according to an amended complaint filed Friday, to reflect losses from additional investors that have come forward, James’ office said. 



According to the <a href="https://ag.ny.gov/sites/default/files/2024-02/genesis-amended-complaint.pdf">complaint</a>, Gemini falsely advertised Earn as “a highly liquid investment” and misled investors to believe that “Genesis Capital was creditworthy based on Gemini’s ongoing risk monitoring.”



The total number of impacted investors is now 230,000, James said in a <a href="https://ag.ny.gov/press-release/2024/attorney-general-james-expands-lawsuit-against-cryptocurrency-company-digital">statement</a> Friday.&nbsp;



“The fraud and deceit were so expansive that many additional people have come forward to report similar harm,” James added. “This illegal cryptocurrency scheme, and the horrific financial losses that real people have suffered, are yet another reminder of why stronger cryptocurrency regulations are needed to protect all investors.”



The amended lawsuit comes as Genesis continues what have become contentious bankruptcy proceedings. Genesis on Wednesday won a court ruling against Gemini confirming its ownership of Grayscale Bitcoin Trust shares worth roughly $1.2 billion. Gemini had sued Genesis in October over rights to the shares.&nbsp;



Read more: <a href="https://blockworks.co/news/dcg-opposes-genesis-bankruptcy-plan">DCG objects to Genesis bankruptcy plan, claims it ‘favors’ some creditors</a>



A month after the New York attorney general’s office sued both companies, Genesis sued Gemini in an effort to recover over half a billion dollars. Genesis claims Gemini received more than $689 million in withdrawals in the three months before the crypto lender filed for Chapter 11 bankruptcy. Gemini has until Feb. 21 to respond to the complaint.&nbsp;&nbsp;



“As a result of these withdrawals, [Gemini] benefitted at the expense of [Genesis’s] other creditors, and continues to benefit to this day through their retention of the property [Genesis] seeks to avoid and recover here,” the complaint, filed in November, reads.&nbsp;



In the New York attorney general’s lawsuit, parties are due to appear for a preliminary conference on March 4.As their own legal battles heat up, NY Attorney General Letitia James amends her lawsuit against DCG and Gemini



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NY attorney general triples her accusations against Gemini, DCG, seeks $3B

Ben Strack

Genesis has settled a suit that New York’s attorney general launched against the crypto lender last year, marking the crypto firm’s second such agreement in the past week.



New York Attorney General Letitia James in October filed a lawsuit against Genesis and Gemini, alleging the firms had conspired on two “fraudulent schemes” related to their Gemini Earn product.



Investors lost more than $1 billion in November 2022 when withdrawals from the platform were suspended, according to the complaint.



Read more:<a href="https://blockworks.co/news/genesis-gemini-nyag-lawsuit"> New York AG sues DCG, Gemini and Genesis in ‘sweeping lawsuit’</a>



<a href="https://blockworks.co/tag/genesis">Genesis</a>’ proposed settlement agreement, filed Thursday, is a step toward “eliminating the risks, expenses and uncertainty associated with protracted litigation against NYAG,” the company said in a court motion.



The motion must still be approved by the US bankruptcy court, the document notes.



Genesis’ lending unit filed for Chapter 11 bankruptcy protection in January 2023.&nbsp;&nbsp;



“The Special Committee has concluded that it would not be in the best interests of the debtors’ estates to continue to incur litigation costs and expenses to defend against the NY Action related to business activities that are not ongoing,” the motion states.



As part of the proposed agreement, Genesis would cease all current and future business activities in New York.&nbsp;



Gemini said in an October X <a href="https://twitter.com/GeminiTrustCo/status/1714984800660926608?s=20">post</a> that it disagreed with the New York attorney general, including the firm in the complaint. Genesis lied to Gemini about its financial position, the company claimed, adding that Gemini, Earn users, and other creditors were “the victims of a massive fraud.”&nbsp;



A representative for Genesis could not immediately be reached.&nbsp;



Genesis parent company Digital Currency Group was also named in the complaint for allegedly coordinating with the companies to perpetuate the scheme. The company noted it was “blindsided” by the filing in a statement at the time and denied wrongdoing.



The Thursday motion by Genesis to settle the suit comes about a week after the company <a href="https://blockworks.co/news/genesis-sec-deal-earn-lawsuit">agreed to settle a similar case brought by the SEC</a>.&nbsp;



The US regulator <a href="https://blockworks.co/news/genesis-gemini-charged-with-securities-violations-by-sec">filed its suit</a> against Genesis in January 2023, accusing the company of pooling assets from Gemini Earn with funds from other customers.&nbsp;



Genesis could pay $21 million as part of the agreement, the SEC said last week, though the amount is subject to creditor repayment.



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Genesis agrees to settle case brought by New York attorney general

New York Attorney General Letitia James has filed a “sweeping lawsuit” against Gemini, Genesis and Digital Currency Group (DCG).&nbsp;



The suit also targets DCG CEO Barry Silbert and ex-Genesis CEO Michael Moro. No Gemini executives were named in the suit.



The complaint alleges that Gemini and Genesis Capital conspired on two “fraudulent schemes” with their Gemini Earn product, resulting in investors losing more than $1 billion in November 2022 when withdrawals from the platform were suspended.



Genesis Capital’s parent company DCG “coordinated” with the companies to perpetuate the scheme, the complaint alleges.&nbsp;



According to the <a href="https://ag.ny.gov/sites/default/files/court-filings/nysoag-complaint-against-gemini-et-al.pdf">complaint</a>, Gemini falsely advertised Earn as “a highly liquid investment” and misled investors to believe that “Genesis Capital was creditworthy based on Gemini’s ongoing risk monitoring.” The attorney general says Genesis Capital, in reality, was actually at a high risk of default.&nbsp;



James claims that Earn falls under the definition of an investment contract. The SEC also alleged back in January that the <a href="https://blockworks.co/news/genesis-gemini-charged-with-securities-violations-by-sec">Earn program operated as an investment contract</a> under the Howey test.



“The Genesis Entities, [Michael] Moro, DCG, and [Barry] Silbert disguised $1.1 billion in losses through a months-long campaign of misstatements, omissions, and concealment,” the complaint reads.&nbsp;



James’ office cites a series of posts on X, statements and other promotional material in which the companies allegedly deliberately misled the public about the nature and safety of their product.&nbsp;



“The Genesis Entities, DCG, Moro, and Silbert falsely assured counterparties and the public that Genesis Capital was ‘well-capitalized’ and that DCG ‘absorbed the losses’ from the Genesis Entities,” the complaint reads.&nbsp;



Gemini also “falsely assured the public” through public statements that the Genesis Capital loan book was overcollateralized, though it was not.



“On March 9, 2021, a risk management employee reporting directly to Gemini’s Head of Risk corrected a similar misstatement by stating: “[l]ending is ‘collateralized’ but not necessarily ‘overcollateralized,’” the suit claims.



In fact, according to the lawsuit, Gemini gave Genesis a junk rating.&nbsp;



“Based on this credit rating, the risk management team projected that in a market downturn, ‘a 50-60% default rate for Genesis [Capital] [wa]s an appropriate assumption, given additional risks in Crypto industry vs traditional industry,’” the suit said.



In September 2022, Gemini allegedly sought to terminate the Earn program. It proceeded to send a notice to Genesis in October to terminate the Earn agreements, which would mean the return of investor assets.&nbsp;



This was never announced to investors, but the suit said “these were material facts for investors.” As such, “Gemini had an affirmative duty” to let investors know, the complaint alleged.



Gemini and Genesis parent company DCG have long butted heads, with Gemini filing its own lawsuit against DCG this summer alleging fraud. DCG, according to the suit, “aided and abetted Genesis in making fraudulent misrepresentations to Gemini with respect to Genesis’s financial condition and the support it received from DCG.”



<a href="https://blockworks.co/news/gemini-suit-accuses-dcg-silbert-of-aiding-and-abetting-fraud">DCG labeled the lawsuit</a> a “publicity stunt” and claims the suit is <a href="https://blockworks.co/news/dcg-gemini-lawsuit">filled with “misrepresentations.”</a>



The NYAG complaint comes as ex-FTX CEO Sam Bankman-Fried’s criminal trial continues in Manhattan. He faces seven federal counts of fraud and conspiracy.&nbsp;



Over the past three weeks of testimony, prosecutors have alleged that Bankman-Fried provided fraudulent financial statements to lenders and stole FTX customer money to cover loan payments. Almost 60% of Genesis’ third-party loans were to Alameda, according to the complaint.&nbsp;



“Gemini’s internal analyses of Genesis showed that the company’s financials were risky,” a <a href="https://ag.ny.gov/press-release/2023/attorney-general-james-sues-cryptocurrency-companies-gemini-genesis-and-dcg">statement</a> from James’ office said. “The lawsuit alleges that Gemini knew Genesis’ loans were undersecured and at one point highly concentrated with one entity, Sam Bankman-Fried’s Alameda, but did not reveal this information to investors.”



“The NY AG’s lawsuit confirms what we’ve been saying all along — that Gemini, Earn users, and other creditors were the victims of a massive fraud and systematically ‘lied to’ by these parties about ‘Genesis’s financial condition,” Gemini said in a <a href="https://x.com/GeminiTrustCo/status/1714984800660926608?s=20">post</a> on X Thursday morning.&nbsp;



“With that said, we wholly disagree with the NY AG’s decision to also sue Gemini. Blaming a victim for being defrauded and lied to makes no sense and we look forward to defending ourselves against this inconsistent position.”



In a statement Thursday, DCG said, “We fully intend to fight the claims and look forward to being vindicated in this case. DCG has always conducted its business lawfully and with integrity. We have actively cooperated for months with the Attorney General&#8217;s investigation in an open and transparent manner. We were blindsided by the filing of the complaint, and there is no evidence of any wrongdoing by DCG, Barry Silbert, or its employees.”



Silbert, in a separate statement emailed to Blockworks, said, “I am shocked by the baseless allegations in the Attorney General&#8217;s complaint and intend to fight these claims in court.  Honesty and integrity have always been my guiding principles. Last year, my and DCG&#8217;s goal was to help Genesis weather the storm caused by the collapse of Three Arrows and position Genesis for success going forward. It is unfortunate that this lawsuit omits that fundamental fact.”



Updated Oct. 19, 2023 at 12:40 pm ET: Added comment from DCG and Silbert.



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New York AG sues DCG, Gemini and Genesis in ‘sweeping lawsuit’

CoinEx, a Hong Kong-based crypto trading platform, has agreed to pay out $1.7 million to the <a href="https://blockworks.co/tag/nyag">New York Attorney General</a> and cease operations in New York.&nbsp;



Of the $1.7 million sum, $1.1 million will go toward refunds for nearly 4,700 New Yorkers. The other $600,000 will go to pay state penalties.&nbsp;



The exchange is <a href="https://blockworks.co/tag/tether">Tether</a>-based, and predominantly trades bitcoin (<a href="https://blockworks.co/price/btc">BTC</a>) and <a href="https://blockworks.co/price/usdt">USDT</a>, with no USD pairings.&nbsp;



The New York Attorney General’s office <a href="https://ag.ny.gov/press-release/2023/attorney-general-james-sues-cryptocurrency-platform-failing-register-new-york">sued</a> CoinEx back in February, alleging that it violated the Martin Act by not registering with the state.&nbsp;



The <a href="https://digitalcommons.law.umaryland.edu/cgi/viewcontent.cgi?referer=&amp;httpsredir=1&amp;article=1010&amp;context=jbtl">Martin</a> Act — established in 1921 — makes it illegal for anyone offering to sell or selling securities as a dealer, broker or salesman without registration.&nbsp;



Because CoinEx claimed to be an exchange and wasn’t registered with either the Commodities Futures Trading Commission or the SEC, it was in violation of the Act, the New York Attorney General’s office <a href="https://ag.ny.gov/search?term=martin+act&amp;sort_by=relevance&amp;sort_order=DESC">claims</a>.



“Today’s agreement should serve as a warning to crypto companies that there are hefty consequences for ignoring New York’s laws. My office will continue to crack down on crypto companies that brazenly disregard the law, mislead investors, and put New Yorkers at risk,” NY Attorney General <a href="https://blockworks.co/tag/Letitia-James">Letitia James</a> said in the press release.&nbsp;



The CoinEx settlement is the latest case in a string of crypto-related suits and settlements — <a href="https://blockworks.co/news/crypto-market-ether-security-nyag">including one against KuCoin</a> — brought forth by the New York Attorney General’s office. The attorney general has <a href="https://blockworks.co/news/crypto-fraud-needs-order">also expressed plans to bring a bill to state legislators</a> which would require crypto firms to complete audits, submit financial statements and boost fraud protection.



“Rampant fraud and dysfunction have become the hallmarks of cryptocurrency and it is time to bring law and order to the multi-billion-dollar industry,” James said in May.



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Hong Kong-based CoinEx to exit New York, pay $1.7M in NYAG settlement

The conflict around state versus federal cryptocurrency regulation heats up with a new effort in New York to further establish itself as a policy pioneer.&nbsp;



New York State Attorney General <a href="https://blockworks.co/tag/letitia-james">Letitia James</a> plans to bring a bill to state legislators next month that would require crypto companies to complete audits, submit financial statements and increase fraud protection.&nbsp;



“Rampant fraud and dysfunction have become the hallmarks of cryptocurrency and it is time to bring law and order to the multi-billion-dollar industry,” James wrote in a statement Friday.&nbsp;



The proposed bill, known as the Crypto Regulation, Protection, Transparency, and Oversight (CRPTO) Act, also includes new rules around custody and lending; increasing scrutiny around which companies are allowed to hold assets and facilitate leverage trading.&nbsp;



The news comes as lawmakers across the country continue to disagree over how to oversee the growing crypto industry.&nbsp;



New York leaders have maintained their approach to cryptocurrency regulation is one of the more advanced in the US. The state rolled out its <a href="https://blockworks.co/news/ny-authorities-more-fees-crypto-companies">BitLicense</a> in 2015, a policy that prompted some companies to cease operating in the state. Since then, other states, including Illinois and New Jersey, have expressed interest in passing similar regulations based on New York’s framework.&nbsp;&nbsp;



Rep. Ritchie Torres, D-N.Y., said he would not be inclined to support any legislation that undermined New York’s current stablecoin regulatory policy during an <a href="https://blockworks.co/news/house-grapples-with-stablecoins">April stablecoin hearing in the House</a>.&nbsp;



Some New York state regulators have taken what the industry sees as a slightly more crypto-friendly approach.&nbsp;



During April’s hearing, witness Adrienne A. Harris, superintendent of the New York State Department of Financial Services, countered a popular narrative that crypto is to blame for recent banking collapses.&nbsp;



“It is a misnomer that the failure of Signature Bank was related to crypto,” Harris said during the hearing, in response to a question from Rep. Maxine Waters, D-Cali., about crypto’s role in the banking crisis.&nbsp;



Stablecoins, which have long been speculated to be the first area of policy congressional leaders will tackle with digital assets, are also a concern in James’ new proposal.&nbsp;



The CRPTO Act would limit companies from being able to use the term ‘stablecoin;’ only allowing assets fully backed dollar-for-dollar to be labeled as such.



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Crypto’s ‘Rampant Fraud and Dysfunction’ Needs ‘Law and Order,’ NY AG Says

New York’s attorney general is suing the former CEO of bankrupt crypto lender Celsius Network, alleging that the executive defrauded hundreds of thousands of investors out of billions of dollars in crypto.



The civil <a href="https://ag.ny.gov/sites/default/files/mashinsky_complaint.pdf" target="_blank" rel="noreferrer noopener">lawsuit,</a> filed by New York Attorney General Letitia James Thursday, alleges that ex-CEO Alex Mashinsky made false and misleading statements about Celsius’ safety to encourage investors to deposit digital assets onto the platform. 



“As announced on September 27, 2022, Alex Mashinsky is no longer employed by Celsius and is not involved in the management of the company,” a Celsius spokesperson told Blockworks.



Mashinsky also failed to register as a salesperson for Celsius and as a securities and commodities dealer, the lawsuit states.&nbsp;



More than 26,000 New Yorkers were impacted, James said. The suit seeks to ban Mashinsky from doing business in New York and require him to pay damages, restitution and disgorgement.



“The law is clear that making false and unsubstantiated promises and misleading investors is illegal,” James said in a statement. “My office will stay vigilant and ensure that bad actors trying to take advantage of New York investors are held accountable.”



Mashinsky could not be immediately reached for comment.



The suit follows Celsius initiating <a href="https://blockworks.co/news/celsius-to-file-for-bankruptcy-imminently-report">bankruptcy proceedings</a> in July, about one month after it halted <a href="https://blockworks.co/celsius-lending-platform-suspends-withdrawals-and-transfers">withdrawals</a>, citing “extreme market conditions.”



A federal bankruptcy judge <a href="https://blockworks.co/news/not-enough-value-left-to-repay-celsius-customers">ruled</a> Wednesday that Celsius owns the tokens customers deposited into its interest-bearing accounts before filing for bankruptcy. The crypto was worth $4.2 billion in July 2022, and the firm had about 600,000 accounts in highest yield-bearing crypto products as it went bust.



This is not the first time James has pursued legal action against players in the crypto industry. She <a href="https://blockworks.co/news/new-york-attorney-general-issues-call-for-crypto-industry-whistleblowers">called on</a> New York crypto investors in August to contact the Investor Protection Bureau if they had been “deceived” or affected by the market crash.



A <a href="https://ag.ny.gov/press-release/2021/attorney-general-james-ends-virtual-currency-trading-platform-bitfinexs-illegal" target="_blank" rel="noreferrer noopener">settlement</a> with Tether in February 2021 ousted the leading stablecoin from New York. The attorney general also sued crypto lender Nexo, a long-time Celsius rival, last September. James claimed Nexo failed to register with the state as securities and commodities brokers, and for lying to investors about its registration status.



A few months prior, in June, James reached a nearly $1 million <a href="https://ag.ny.gov/sites/default/files/2022.06.07_blockfi_nyoag_aod.pdf" target="_blank" rel="noreferrer noopener">settlement</a> with BlockFi Lending for offering unregistered securities.



Updated Jan. 5, 2022 at 1:06 pm ET: Added comment from Celsius spokesperson.



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Celsius Founder Mashinsky Defrauded Thousands for Billions in Crypto: NYAG

Sam Reynolds

<div id="highlights-block_616d936ce3602" class="highlights">
 <ul>
 <li>New York Attorney General Letitia James today announced a campaign against the crypto lending industry under the auspices of consumer protection</li>
 <li>Crypto lending protocols Nexo and Celsius have received requests for information from the NYAG — but not subpoenas</li>
 </ul>
 
</div>



Crypto lending protocols, which pay users an above-market interest rate for their digital asset deposits, have been banned in New York, the state’s Attorney General announced Monday, and an investigation is underway into the operations of two of the largest platforms.&nbsp;



“Cryptocurrency platforms must follow the law, just like everyone else, which is why we are now directing two crypto companies to shut down and forcing three more to answer questions immediately,” said Attorney General James in a press release. “My office is responsible for ensuring industry players do not take advantage of unsuspecting investors.”



Attached to the press release, the NYAG posted two of the letters sent requesting more information. While part of the content of the letters was redacted, the file names on the NYAG’s website revealed they were sent to Nexo and Celsius.



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="827" height="363" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Microsoft_Word_-_Celsius_Letter_10_14_21.jpg" alt="NYAG redacted letter" class="wp-image-9507" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Microsoft_Word_-_Celsius_Letter_10_14_21.jpg?w=827 827w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Microsoft_Word_-_Celsius_Letter_10_14_21.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Microsoft_Word_-_Celsius_Letter_10_14_21.jpg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Microsoft_Word_-_Celsius_Letter_10_14_21.jpg?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Microsoft_Word_-_Celsius_Letter_10_14_21.jpg?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Microsoft_Word_-_Celsius_Letter_10_14_21.jpg?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Microsoft_Word_-_Celsius_Letter_10_14_21.jpg?w=80 80w" sizes="auto, (max-width: 827px) 100vw, 827px" /><figcaption>The NYAG later <a href="https://ag.ny.gov/sites/default/files/informational_letter_redacted.pdf" target="_blank" rel="noreferrer noopener">corrected</a> the oversight</figcaption></figure>



As of now, these letters are simply requests for information and are not subpoenas thus the companies are under no obligation to respond.



Among the information requested are &#8220;all contracts, agreements, or other communications with Tether Limited, or other affiliated persons or entities,&#8221; and &#8220;a list of transactions by or through your platform or service that, in whole or in part, include USDT, including all relevant transaction details.&#8221;



Tether has loaned Celsius $1 billion dollars secured by crypto collateral, Blockworks <a href="https://cms.blockworks.co/celsius-reportedly-borrowed-1b-from-tether-with-bitcoin-as-collateral/" target="_blank" rel="noreferrer noopener">previously reported</a>.



The NYAG did not specify if this ban and investigation is a result of consumer complaints against the mentioned companies.&nbsp;



This announcement from the NYAG <a href="https://cms.blockworks.co/celsius-valued-at-3-25b-after-400m-raise-amid-regulatory-headwinds/">comes days after</a> Celsius closed a $400 million round valuing the company at $3.25 billion. The round was led by Caisse de dépôt et placement du Québec (CDPQ), the province of Quebec’s pension fund, and one of the largest institutional investors in the country with nearly $323 billion assets under management.&nbsp;Celsius has nearly $20 billion in assets under management. In a previous interview with Blockworks, its CEO Alex Mashinsky said that, “the 8.8% we pay on stablecoins is the real value of the US dollar. It’s not 0.1%, which is what JP Morgan or Wells Fargo or other people tell you that you should be earning for your dollar.”



This is not the first time Celsius has faced state scrutiny. Earlier this year <a href="https://cms.blockworks.co/celsius-valued-at-3-25b-after-400m-raise-amid-regulatory-headwinds/" target="_blank" rel="noreferrer noopener">the company received</a> Cease and Desist Orders from authorities in Texas and New Jersey. Another prominent centralized lending platform, BlockFi, <a href="https://cms.blockworks.co/regulators-are-coming-for-crypto-heres-how-firms-are-reacting/" target="_blank" rel="noreferrer noopener">has faced similar questions</a> from regulators.



Celsius did not respond to a request for comment by press time. Its token CEL is down 7%, according to data from <a href="https://www.coingecko.com/en/coins/celsius-network-token">CoinGecko</a>.



Nexo <a href="https://twitter.com/NexoFinance/status/1450124848173355017" target="_blank" rel="noreferrer noopener">has denied</a> serving New York State entirely. The Nexo token NEXO is trading <a href="https://www.coingecko.com/en/coins/nexo" target="_blank" rel="noreferrer noopener">-2.8% lower</a>.